Obama Cared

OBAMA CARED: THE IMPORTANCE OF ESSENTIAL HEALTH BENEFITS IN THE AFFORDABLE CARE ACT

By: Jesse Goldfarb, Volume 101 Staff Member

A key provision in the Affordable Care Act (ACA) mandates that certain types of benefits be included in any healthcare insurance plan on the state and federal exchanges.[1] While there are no specific benefits required, the provision necessitates that the scope of coverage reflects “an appropriate balance among the categories described” and “takes into account the health care needs of diverse segments of the population.”[2] Importantly, the essential benefits coverage provides stipulations for caps on out-of-pocket spending for beneficiaries that coincide with other out-of-pocket limitations within the ACA.[3] The provisions were intended to ensure insurance companies would include basic services within all coverage policies and that all individuals seeking health care coverage would have at minimum, access to basic medical services.[4] Policy wise, these essential health benefits help establish rights to coverage for beneficiaries.[5] Today, minimum essential benefits count for 89% of individual coverage claims.[6] Under the recent failed effort to repeal and replace the Affordable Care Act, these essential health benefits were at the center of the disagreements between the conservative and moderate wings of the Republican Party. While the Affordable Care Act is safe for now, it is likely that this debate will persist moving forward.[7] This Post will argue that this provision is essential to ensure that individuals seeking coverage will have access to medical services at affordable costs. Without this provision, insurance companies have far too great an incentive to provide minimal coverage for policyholders that will inevitably lead to overly burdensome out-of-pocket expenses. This will disproportionately affect lower-income people.

I. THE REASONS FOR ESSENTIAL HEALTH BENEFITS IN THE AFFORDABLE CARE ACT

Many Republicans have argued that essential health benefits drive up premium costs because they force insurance plans to cover more than what is cost-efficient.[8] In addition, other critics have argued that these mandated coverage provisions force people to purchase more insurance than they want or need.[9] In advocating this point, many gave the classic example of the older male who is forced to pay for coverage for maternity care as a result of these provisions.[10] Had these provisions been eliminated under the ACA replacement bill, it is likely that premiums would have gone down for healthier individuals because they would have allowed people to choose which coverage options they wanted insured.[11] These lower premiums for healthy individuals, however, would come at a steep price to those from lower-income backgrounds seeking comprehensive coverage and those who are already sick or who require other health services (i.e, pregnant women) and require more comprehensive coverage.[12]

While concerns about the rising premiums of health care warrant additional consideration, eliminating these essential health benefits would decrease health outcomes of many families. Under the ACA in its current form, there is no private cause of action under federal law to enforce consumer rights.[13] Despite this, the language of the ACA mandates that the Secretary of Health and Human Services review essential health benefit coverage to ensure that is cost effective and that all enrollees can access the required services.[14] Because the ACA uses mandatory rather than permissive language in outlining the scope of the Secretary’s duties, Congress in essence gave enrollees a right to minimum coverage benefits. While stopping short of guaranteeing a universal right to health coverage, these benefits indicate Congress’s desire to provide basic health services for all Americans, regardless of how they obtain coverage.[15] While a new Congress has the authority to revoke these rights, the language in the ACA shows that the law is moving in a direction where certain coverage is considered minimally essential and a fundamental right.

II.THE CONSEQUENCES OF REPEALING ESSENTIAL HEALTH BENEFITS

The repeal of the essential health benefits would also have a costly impact on populations that require more medical services as well as those who seek broader coverage or those who are unfamiliar with the scope of different coverage plans. Unfortunately, the population who would be most affected by these changes would be older and lower-income—the same population that most needs government-subsidized health care options. Under the Republican plans, healthy individuals could purchase limited coverage for low-costs.[16] While keeping down costs for a few individuals, on a larger scale, this would effectively take healthy individuals out of the same pools as high-risk individuals and increase the costs for coverage for those with higher-health needs.[17] In addition, because essential health benefits include preventive care, the costs of treating overall conditions will increase because conditions will worsen before insurance coverage kicks in.[18] This will increase the costs to the health care system overall.[19] By allowing individuals to resolve health issues earlier, the overall costs are lowered and individuals have greater incentive to seek medical help when they are relatively healthier.

Prior to the ACA, each state regulated small group and individual insurance markets entirely independent of one another.[20] States greatly varied on the levels of coverage offered.[21] Under one of the Republican proposals, minimum required coverage would return to this model and state health outcome disparities would grow exponentially.[22] At the time of the implementation, the purpose of the benefits was to ensure that all people seeking insurance could afford the necessary coverage and that those in need of more expensive coverage could afford services without risking bankruptcy.[23] Should essential health benefits be repealed, through either federal overhaul or through state legislation, many families would risk bankruptcy because insurance companies would have incentive to cover the minimum amount of services as possible. They would have incentive to drop or increase the rates of as many expensive services as possible and only provide services for treatments that are cheaper to cover. The effect of this policy could prove disastrous for many individuals with specific health needs. Take for example a child who is on the autism spectrum. The most effective treatment for children with autism can take up to 40 hours a week for multiple years. The out-of-pocket costs for such treatment would bankrupt most families.[24] Because the Affordable Care Act mandates coverage of these services, families in this position can afford to cover their children and the children can receive the best health outcome available.

CONCLUSION

The debate over essential health benefits will likely continue throughout future debates in health care legislation. Questions remain about whether conservative Republicans have sufficient political capital to remove these benefits from future health care legislation. Should they be removed, however, there would be severe consequences for families who most need coverage. These consequences should not be ignored.

The ACA preserved the states right to create causes of action under state law for consumers denied proper coverage. Christine H. Monahan, Private Enforcement of the Affordable Care Act: Toward an “Implied Warranty of Legality” in Health Insurance, 216 Yale L. J. 1118, 1122 (2017). ↑